Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 28 Balance of Trade and Balance of Payments Notes
→ Balance of trade and balance of payment are important aspects in international trade.
→ Balance of payment refers to a systematic record of all economic transactions between the residents of one country and the residents of foreign countries during a particular period of time.
→ Balance of payment is the principal tool for the analyzing the monetary position of international trade of a country just like Receipt and Payment account of enterprise revealing the net effect of cash movements during in an enterprise to a particular period.
→ A Balance of Payment surplus indicates that country^ exports are more than its imports and its government and residents are savers.
→ According to International Monetary Fund, “ The balance of payments for given period is a’systematic records of all economic transactions taken place during the period between residents of the reporting countries.” .
→ In the words of Domini Salvatore “The Balance of payment is a summary statement in which principle all the records of the resident of a nation with the resident of all other nations are recorded during a particular period of time, usually a calendar year.”
. → BOP shows a favourable or surplus position when the total receipt’s from foreign countries exceed the total payment to foreign countries.
→ Balance of trade denotes the difference between the value of import and the value of export during a year.
→ Private capital consists of foreign investments, long term loan and foreign currency deposits.
→ Banking capital includes movement into external financial asset and liabilities commercial and co-operative banks authorized to dealing in foreign exchange.